Do You Have a Debt-Free Date?

By Charmaine Huber

Google debt stress and you’ll get over 69 MILLION results. Credit is seductive. Credit card companies spend millions of dollars to convince you to borrow their money. They have catchy slogans like:

• It’s everywhere you want to be. (Visa)
• There are some things money can’t buy. For everything else there’s Mastercard.
• What’s in your wallet? (Capital One)
• Don’t leave home without it. (American Express)

It’s no wonder that credit monitoring agency TransUnion is predicting the average consumer’s debt will reach an all time high by the end of 2014.  

But there are things you can do right now to lower debt and debt stress.

First, decide that debt repayment is your priority. It doesn’t mean it is your only priority but it has to rank high and be consistent.

Second, tackle one debt at a time. A popular way to do this is often called the snowball method. You begin with a small manageable payment on your smallest debt that exceeds the minimum payment, and make the minimum payments on your larger debts.

When the smallest debt is paid you apply the payments you were making on that debt to the next highest debt along with that debt’s minimum payment. The idea is that as the smaller debts are eliminated you have more money available to make bigger payments on the larger debts.

You are probably thinking it would make better money sense to pay off the debt with the highest interest rate first, and that is usually the case, but what’s most important is making progress. Debt has almost as much to do with emotion as it does dollars. If eliminating smaller debts first, regardless of interest rate, feeds your momentum and sense of accomplishment, then you are more likely to stick to your plan.

Third, establish your debt-free date. Write it on a calendar and get excited about it.

How do you do this? With our Money Coaches Debt-Free Calculator. This is an editable Excel document that you can personalize with your own financial numbers, by filling in the yellow highlighted areas. You can refer back to this calculator as you progress with your plan and it even includes the option of adding extra payments from time to time when you can.

One of the keys to personal money management is engagement with your money. Trouble starts when you go on financial autopilot and lose track of how much you are spending. The longer you are disengaged the higher the stress climbs. By taking the steps in this post, you can transform this vague unease into money confidence.

Charmaine Huber, BA, is a Certified Money Coach located in the Simcoe County-York Region of Ontario. Her specialization is debt and cash flow management for individuals, families and entrepreneurs. For more information or to schedule a free consultation, please visit Charmaine on the web at mcoaches.ca/charmaineh.

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Sue Cook, RSW, CCC, MEd Counselling, BAFN, CYC

Sue started working in this profession in the early 1980s and has had the opportunity and privilege of assisting thousands of people. She has experience in the public sector working in education, non-profit and government agencies. She has run her own private practice since 2000 and expanded in 2007, inviting others to join her business.

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